Alright so, LinkedIn had its debut as a publicly traded company on Thursday. If you followed it- it exploded. My thoughts? It is absurd- now this is just my opinion, but I am going to say the stock will be worth way less than 1/2 what it is worth today, in 5 years worth of time. But that said, I think LinkedIn just played out the future for Facebook’s IPO and Twitter, if it plans to go public in the future also.

If you look at the earnings multiple and compare that to other companies, the other companies would be worth trillions. Hmmm….smells familiar. But back to Facebook and the future of social IPOs. In fact, I wouldn’t say just social IPOs, but everything related to social. Imagine Zynga having its IPO, etc. What LinkedIn did, Facebook will probably do with more noise, and quite possibly Twitter, too. The problem is that LinkedIn creates very little long term value (I feel). And the general population just doesn’t know that yet. However, a new startup BranchOut, will eat LinkedIn’s lunch, and dinner, and its fourthmeal.

Now that we’ve established that Facebook will have an even more jaw dropping debut on the public market, lets discuss how LinkedIn has a big problem.

BranchOut is basically LinkedIn ON Facebook. I should end my post here and just hit publish, but I’ll explain. People don’t want to be on 10 different services, that require remembering 10 different passwords, and connecting (finding) their contacts on those 10 networks over and over. Another problem is that some contacts are not on all 10 networks. BranchOut brings the LinkedIn features to Facebook (where the world *or at least 600 million people* lives). This makes it way too easy for people to career network on Facebook to even think about being on LinkedIn.

A lot of people might argue its good to keep social fun and social business apart from each other, but lets be honest, the world is becoming a more centralized place. We party with co-workers, and we work with friends. Others might think it will be questionable for BranchOut to build a layer on Facebook where it offers LinkedIn type functionality and the question that if BranchOut will be successful. But we can all learn a lesson from Zynga, whose supposedly valued in the billions, that building a layer on top of Facebook is possible, in a juggernaut way.

I could keep writing and express more opinions about this whole situation, but feel we should just keep it at that and watch what happens.

P.S. Congratulations to Reid and the team for such a successful exit!

Broadcast.com, Dodgeball, LinkExchange. Countless others.

You may or may not have heard of these companies, but they were all sold to bigger companies (Yahoo, Google and Microsoft respectively), and then became defunct.

Entrepreneurs build companies for one reason and one big reason- to make money- lots of it. Yes- companies are built to fix problems, better the world, and to create jobs, but honestly, it’s all about money at the end of the day. 

So why do large companies acquire smaller ones? Many reasons.

• Talent acquisition- The acquirer wants the people making acquiree work. 
• Eliminate the competition (or future competition)- Large companies want there to be less competition, so they try to eliminate the largest competitor, sometimes even before they become competitor worthy. It’s common juggernauts just acquire so there’s less on the battlefield. Anti-trust issues anyone?
• Ignorance- “Lets buy ‘em, they are cool. We’ll figure out what to do with them later.” 6 months later- “that wasn’t such a bright idea.”
• For parts- It could be a large company is working on building a product that a startup does well in, or a piece of the startups technology can contribute to the product the large company is building, so they will use it for parts and scrap the rest. Some can argue this might not be the death of a startup, but instead rebranding.
• Good product, bright future- Most of the time companies are acquired if they have a rockstar product and the large company can “make it rain” after they acquire the startup, with their endless resources.

So how do companies die after acquisition?

• Lack of vision- “They” didn’t start the up start and nurture it until it succeeded. The entrepreneur did. Due to this, they probably don’t know where to take it. Many people can drive cars, but when you jump in someone else’s car, it takes awhile to learn the controls, by the time you learn, people are already passing you up.
• Money-  Even at a startup, money matters, but it matters more so when someone paid $1 billion to acquire something and then it doesn’t generate enough cash to justify it. If the money a startup brings in isn’t increasing with time passing, after being acquired, it will start being ignored. This happens when the acquirer has high hopes, but can’t make those hopes become a reality.
• Buying into a fad- This has probably happened a lot. MySpace anyone? It was cool for its users and “in” when it was acquired, but now it stinks- some may blame this on lack of innovation, but honestly, it was the model…too open, too much spam, Facebook is/was a better option.

The saying prepare for the worst and hope for the best might come in play here. And selling isn’t a bad thing, because the goal is to make a lot of money when someone starts a startup (unless it’s non-profit, but you still need cash).